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Math Help - Finance-Formulas

  1. #1
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    Finance-Formulas

    Hello

    My maths book does not provide the formula for finding the depreciation and inflation in questions such as...

    Q.1) A particular car has a new value of $32 000. If we assume a constant annual depreciation rate of 12% what will the value of the car be when it is 5 years old.

    Q2) What steady annual rate of inflation would cause the value of an item to rise from $2500 to $18400 in 25 years.

    Q3)A particular house has a current value of $350 000. If we assume a constant annual inflation rate of 4.8% what will the value of this house be 2 years from now.

    What is the formula for these questions?


    Thank you
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  2. #2
    MHF Contributor alexmahone's Avatar
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    A1) A=P(1-\frac{r}{100})^5
    A=\$32,000(1-\frac{12}{100})^5
    A=\$32,000*(\frac{88}{100})^5
    A=\$16,887
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  3. #3
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    Quote Originally Posted by atom360 View Post
    My maths book does not provide the formula for finding the depreciation and inflation in questions such as...
    The intent of not providing such a thing might be encouragement for you to think on it.

    If the value of a a car was $20,000 and it suffers 5% deflation in one year, what is the value of the car at the end of the year?

    If the value of a house is $100,000 and it experiences 3% inflation over one year, what is the value of the house at the end of one year?

    Can you answer these? Just one year!
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